The tax challenges raised by the Digital Economy have triggered high dynamics in the international tax environment. The recent Organisation for Economic Cooperation and Development (OECD) publications of the proposed Pillar One is a clear example of this global phenomenon. This Pillar aims to allocate new taxing rights on non-routine income (Amount A) to market jurisdictions, even in absence of physical presence (e.g. scale without mass), and fix the amount of routine income connected to certain limited marketing & sales activities (Amount B), via the introduction of a new set of tax rules potentially operating on top of the existing ones.
Pillar One could be qualified as a “re-set” of the international tax system, bringing more tax revenue to market jurisdictions. We can help you to assess the possible impact of Pillar One reflecting more and broader taxation rights allocated to the markets. Together, we can navigate the resulting uncertainty and challenges to your business by:
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One of the solutions to address the impact and consequence of the digitalisation of the global economy are the OECD’s Pillar One and Pillar Two blueprints. The OECD released these two blueprints for future concrete solutions on 12 October 2020, after years of research and political debates with various stakeholders, including publications of interim reports and consultations. In particular,
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Even though the Pillar One Blueprint is still under discussion and its contents may change, the OECD is now committed to publishing a final report, including a draft for legislative implementation by mid-2021. Although wide ranging views on the various design elements of Pillar One have been expressed by various jurisdictions, part of the OECD / G20 Inclusive Framework and other stakeholders, a very clear message has been given to the OECD; the current design of Pillar One is too complex and simplification is required. For a more detailed overview of the public consultation meeting, a summary prepared by PwC Tax Policy Globally, outlining some of the main items discussed as part of the consultation, can be accessed here. We will update you via the web page and our Tax Newsletter.
To get clear insights into how the OECD two pillars proposal may impact your business, PwC has developed the Market Taxation Analyser (MARTA). This tool uses a combination of publicly available information and your own readily available data, submitted via an Excel based information.